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Innovating financial services

BBazaar wants to enable consumers, banks to benefit from digitisation of financial products

It aims to introduce a free credit scoring tool for users in future

In recent years, financial technology (fintech) start-ups championing the platform model have mushroomed, enabling users to search for, compare and even purchase financial services and products online.

These ‘platform businesses,’ according to online financial services marketplace BankBazaar International CEO Vipin Kalra, give companies vast opportunities for value creation and differentiation via technology.

A platform is essentially a medium that enables others to connect to it and can be found in a growing number of industries, such as social networking and e-commerce.

And this comes into play because of the rapid evolution of technology that is resulting in changing consumer behaviours and expectations.

The Internet Users Survey 2017 by the Malaysian Communications and Multimedia Commission reveals that nearly 77% of the population (24.5 million) are active Internet users.

Malaysians are also becoming more discerning and informed in terms of the products they consume, especially when it’s related to money matters.

“Consumers are very cost conscious, particularly when it comes to financial services and products. They’re looking for the best deal they can get,” he explains.

In addition to the fast-paced shift in the behaviour of its consumers, Malaysia has also been working on digitising the financial ecosystem and shifting customers towards digital transactions, which is why he says the country is fertile ground for BankBazaar’s international expansion.

Positive response

Thus far, it has secured around US$109 mil (RM443 mil) from four fundraising rounds, recorded 300 million visits from both web and mobile to the website and facilitated 1.5 million transactions.

Known as BBazaar Malaysia locally, the platform was launched in March this year to provide users with access to various financial products including credit cards or loans. It had previously expanded into Singapore in 2017 to positive response.

Kalra says, “We’re a new player in the market, so we’ll start with more ‘mass market’ products such as credit cards, personal loans and car loans.”

In the future, the platform will expand its offerings to other financial services and products such as home loans. Eventually, it will also bring on products for life insurance and mutual funds, he adds.

Digital channel

The vision for the company is simple. It wants to enable, simplify and improve the online delivery of financial services, with the end goal of ensuring that consumers can reap the benefits.

To do so, BBazaar has over the past nine years built a technology platform that boasts an end-to-end paperless journey and has gained experience that it wants to bring into the country.

What it does is work with its financial partners – banks, insurance companies and mutual funds, for instance – to bring products to consumers on its platform and then stays with the customer throughout the life cycle of the application process from search to approval.

Based on customer eligibility data, for instance, the platform will recommend and rank the most suited products with the best value that meet their needs, preference and profile.

Its competitive edge is that users can directly apply on the mobile-friendly website without having to go through a third-party channel.

This means an end to downloading and filling paperwork with personal and banking details, which the platform can pre-populate applications upon selection by the consumer.

“First, we gather the data required by financial institutions by asking our users to fill a form and if they’ve selected a particular product they’re eligible for, we adapt and transfer it into the required form.

“We ask a lot of questions in our form to make sure what we’re suggesting and showing is appropriate for them,” Kalra explains.

That said, when it comes to customer acquisition or conversion, the most important aspect that he highlights is education and ensuring the availability of information.

As such, the BBazaar team frequently writes articles on its blog to educate customers on everyday personal finance and lifestyle topics, which is something it has done two years prior to its expansion into Malaysia as part of its marketing efforts.

He says, “We’re very good at digital marketing and we keep it all inhouse. We write a lot of content to educate consumers, which also drives more traffic to our website.”

At the same time, it also has a customer service call centre to assist customers in their application journey.

Simplifying processes

Digital channels and platforms such as BBazaar can enable financial institutions to gain access to customers who are shopping around, be they existing customers or new ones in a previously untapped or under-served segment.

He shares, “Through our channels, we can reach out to a broader customer base and offer services that are more suited to that consumer segment.

“In that sense, we help banks retain existing customers, but more importantly we’re able to reach out to the underserved and even offer new financial products to a broader customer base.”

By doing all the heavy lifting through acting as an initial screening process and providing completed applications of high quality and eligible customers, the platform is able help financial institutions free up their time and resources.

Kalra says the platform provides a smaller volume of applications that are higher in quality, which is why it is able to get 50% to 70% approval rates, whereas the percentage drops to 10% to 20% for its competitors.

Moreover, platforms such as BBazaar can become an additional digital channel for a bank to increase its virtual presence and also increase its online conversion rate.

Application approval times depend on several factors, including the product, the market, the bank’s structure and the integration with the platform.

“Our best case scenario is in Singapore today, with one of the banks we’re totally integrated with through an application programming interface (API), where we can get in principle approval of less than a minute for a credit card application, subject to further documentation checks,” he adds.

BBazaar already has arrangements with a number of bank partners, but is in talks to bring more onboard.

Fostering financial inclusion

Such partnerships are integral to both financial institutions and fintech companies.

Traditional banks are able to innovate faster to solve specific industry problems and use data analytics to make more accurate decisions, while fintech companies rely on banks for capital, scale, data and regulatory support.

In addition, Kalra cites higher approval rates for applications as an added benefit.

He says, “It has been shown that consumers who apply online through a paperless system achieve approval rates that are three times better than those who go through a manual process.”

Similar to what Ant Financial and WeChat have done in China, as well as the ongoing initiatives in India and the US, BBazaar wants to widen its offering to more customers by helping banks improve their credit scoring processes, which would also help them better manage risk.

“Banks typically would only know customers who bank with them, but what about those who are unbanked or under-banked? There are many cases where banks are just not geared to provide financial services. That’s where we come in,” he says.

As part of this, it will introduce a free credit scoring tool for its users in the near future, by capturing additional data such as consumer behaviour with utility and telecommunication companies, e-commerce platforms and social media.

BBazaar will also educate and guide consumers on ways to improve their credit score and behaviour as well as manage their credit history better, so that banks will recognise them as credible customers.

On privacy and security concerns, Kalra stresses that the company has ISO 27001:2013 certification, a global standard for information security management systems. It also complies with all regulations regarding the Personal Data Protection Act.

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